NEW YORK (CNNMoney) -- U.S. stocks closed mixed Wednesday after the Federal Reserve extended one of its stimulus programs but stopped short of announcing a more aggressive bond buying policy.
The Dow Jones industrial average (INDU) dropped 13 points, or 0.1%, to end at 12,824. The S&P 500 (SPX) lost 2 points, or 0.2%, to 1,355. The Nasdaq (COMP) added 1 point, or less than 0.1%, to 2,930.
The Fed announced plans to extend Operation Twist, the policy of swapping short-term Treasuries in the central bank's portfolio for bonds with a longer duration. The program, which was due to expire June 30, will continue through the end of 2012. The Fed expects to buy $267 billion worth of bonds.
The announcement comes as economic conditions in the United States have deteriorated, with slower than expected job creation weighing on consumer sentiment. In addition, the debt crisis in Europe continues to pose a significant threat to the global economy.
At a press conference Wednesday afternoon, Fed chairman Ben Bernanke said extending Operation Twist is a "substantive step" and that the central bank is "prepared to do what is necessary to provide support for the economy."
Meanwhile, the Fed lowered its outlook for economic growth this year and raised its forecast for the unemployment rate.
The Fed lowered its forecast for 2012 economic growth to a range of 1.9% to 2.4%. In April, the growth outlook was between 2.4% and 2.9%.
At the same time, the Fed raised its forecast for the unemployment rate, predicting it will end the year between 8% and its current 8.2%.
The Fed's Open Market Committee also held interest rates near zero, where they've been since December 2008, in an attempt to boost the economy. The FOMC has said it plans to keep rates "exceptionally low" through late 2014.
The dollar was down against the euro and the British pound but up against the Japanese yen.
Gold futures for August delivery dropped $7.40 to settle at $1,615.80 an ounce.
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